working on an NPI project at work that has a negative NPV, ROI, IRR, operating margin, and net profit due to high operating expenses. Gross margin and revenue are the only positives. You might be surprised that we are still pursuing this project despite these negative metrics, and I will explain why further down. Here is some more background info about the project and the current metrics:

My company has never created an NPI like this before. This NPI has to be cross-sold with a much more expensive product with a high gross margin and healthy sales -- it cannot be used without that product. The NPI will be introduced into a new market where my company has not previously competed and traditionally there has only been one major competitor in the industry that monopolized sales. Since R&D started working on this project, two other competitors have entered the market. We have existing customers who are interested in purchasing this NPI from us because they prefer to use our cross-sold product, so there is a current demand for this NPI in our installed base. For these reasons, we have decided to continue with the project.

Project metrics:

Key Metrics	K $'s
NPV $K	-$5,504
Profitability Index (ROI)	-0.7
IRR	-25%
Revenue	$13,037
Gross Margin	$8,573
Operating Margin	-$6,275
Net Profit	-$5,522

My question for you is:

Would you take on this project given the negative metrics, and especially the negative NPV? What additional factors not mentioned would have to be in place for you to continue with the project?

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